How much is Russia ON LINE with the Rx abd OTC medicines e-commerce?

On April 1, 2020, the State Duma of Russian Federation, in the third reading adopted the law on the online sale of medicines. This applies to prescription and over-the-counter drugs, with the exception of narcotic and psychotropic drugs, as well as alcohol-containing drugs with a volume fraction of ethyl alcohol of more than 25%.

The law allows the online sale of prescription drugs in emergency situations or when “there is a threat of the spread of a disease that poses a danger to others." The rules for the sale of prescription drugs in such cases will be determined by the government, specified in the law. Responsibility for the quality of drugs sold will be vested in pharmacies.

A clause of the law on the government’s right to allow the remote sale of prescription drugs will only be valid until December 31, 2020, Leonid Ogul, deputy head of the Duma’s health committee, said. According to him, this amendment is a response to the situation with the spread of coronavirus infection COVID-19.

The parliamentarian explained that in order to exercise this right, “the government should develop a procedure for issuing permits for the remote sale of “prescription drugs ”, requirements for pharmacy organizations that can carry out such trade, and the procedure for its implementation, as well as rules for the delivery of medicines to citizens. (https://zdrav.expert/index.php)

Yandex is ready to start delivering drugs immediately after the relevant government decree appears, a company spokesman told Forbes. "We have a large flow of requests from people, they often ask about the possibility of getting medicine at home. We are always in touch with the largest pharmacy chains in the country, we have already reached basic agreements, debugged all the processes and conducted tests" the company said.

What is next and what to expect? How the law on the remote sale of drugs will affect the pharmaceutical market. What does this mean for advertising?

Users are interested in buying drugs online, e-commerce over-the-counter drugs can make up 10 to 15% within a year, and advertising budgets will be redistributed in favor of digital, according to Arena, a member of the ADV advertising group. Consumers are actively looking for drugs online as of now.

Based on the analysis of data by Google Trends and Yandex Wordstat, Russian average consumer interest in the pharmaceuticals is noticeable for search requests related to the purchase of medicines online. The trend appeared in the fall of 2019 during the traditional period of increasing incidence of influenza and SARS. The dynamics gradually reached a plateau, but amid news about COVID-19 in February 2020, the intensity of requests increased again. By the end of March, analytics from ADINDEX.RU expect a sharp jump in user activity by almost 2 times.

If we speak about the volume of potential consumers of the online drug purchase service in 2020, then growth can be multiple. Although much depends on the continuity and form of restrictive measures against the spread of coronavirus, as well as the speed of development of the infrastructure of online pharmacies.

A significant situation has developed for Internet services with receiving an order at a pharmacy, such as PHARMACY.RU, PILYULI.RU, Epteka, etc. According to SimilarWeb, from December 2019 to February 2020, the total unique visitors from the top 5 services amounted to 15.7 million, and PHARMACY.RU was the leader in attendance. This online pharmacy audience will take advantage of the option of home delivery of drugs.

E-commerce-sales of over-the-counter drugs in retail can range from 10 to 15%

In the context of the ban on the sale of both OTC and prescription drugs, the market for several years existed in a handicap limbo and worked on the model of online services with the ability to pick up drugs in the nearest pharmacy. In 2018, Data Insight research estimated the volume of this online market at 40.8 billion rubles, and by the end of 2019, it amounted to 83 billion rubles.

Now the pharmaceutical segment will gradually switch to the classic e-commerce model with the ability to order and arrange delivery via the Internet. This guarantees a significant increase for the entire Russian e-commerce market.

According to DSM Group, the total capacity of the commercial drug market in retail for 2019 amounted to 1,021.2 billion rubles ($14.5 bln USD). In packages, the share of prescription drugs is 35.7%, and OTC drugs account for 64.3%. But in terms of value, the market is divided almost in half between Rx and OTC drugs.

In the perspective of one year, it can be expected that the share of sales of OTC drugs in e-commerce will reach 10-15%. This is precisely the size of the market that is characteristic of countries with legalized online drug trading.

The growth rate and volume of the online trading market will depend on two factors: will the remote sale of prescription drugs be allowed and how quickly the issue of delivery will be resolved.

On March 19, it became known about the joint launch of the remote sale of OTC drugs from Yandex.Taxi and a number of pharmacy chains. And at the legislative level, there is already a discussion about the inclusion of prescription drugs in the remote sale.

Online pharmacies will increase investment in advertising up to 30%, and pharmaceutical manufacturers will distribute about 15% of advertising budgets in favor of the Internet

Currently, the pharmaceutical segment is one of the largest in terms of advertising costs. According to Mediascope, in 2019, advertising for medicines and dietary supplements ranks first in terms of TV coverage (27% of all contacts), fifth in the Internet in video advertising (7% of all contacts) and 9th in banner advertising (4% from all impressions). Most of the advertising investment falls on television advertising. According to the results of recent years, Internet advertising is the most growing channel in the media mix of advertisers. Based on an analysis of the Mediascope data, we see that the growth of advertising budgets for banner and video ads for 2019 amounted to 27% compared to the costs of 2018. But at the moment, advertising on the Internet is still significantly inferior to the share of TV in the classic media segment of the pharmaceutical segment. (Source: https://adindex.ru/publication/opinion/internet/2020/03/25/280406.phtml)

@Leonid Amirov, Head of Digital, Pharmaceutical Company Mylan

“We are seeing a significant increase in sales of our drugs through leading online platforms such as PHARMACY.RU and ZDRAVCITY.RU starting in March 2019. This is due both to an increase in media investments of the leading players in the online drug trading market, and to the organic growth of e-commerce in Russia.

To a greater extent, the increase in online drug purchases in 2020 will be due to the adoption of the "Law on distance selling drugs." If lawmakers go further and allow the sale of prescription drugs online, the growth will be really significant. A lot now depends on the procedure for drug delivery. It was originally planned that orders should be delivered by people with a medical education. But that kills the very idea of e-commerce.

TV will remain in high priority in the media mix among pharmaceutical manufacturers. It’s quite difficult to assess the further growth rates of budgets for online advertising, given the unpredictability of the current economic situation and the development of the infrastructure base for online sales.”